AON Benefits From Strategic Partnerships, Expenses Woes Linger

Aon plc AON continues to drive growth through strategic acquisitions and partnerships. New business growth and solid retention rates in solution lines are major tailwinds. Headquartered in Dublin, Ireland, AON offers risk management services, insurance, brokerage and other services.

Let’s delve deeper.

AON’s Growth Drivers

AON generates steady mid-single-digit or better organic revenue growth, supported by strong new business generation and consistent client retention in the mid-90% range. The company continues to deepen relationships through its Enterprise Client Group and Aon Client Leadership framework, which is translating into expanded mandates and higher-quality recurring revenues. In 2025, total revenues rose 9.4% year over year.

Aon strengthens its global reach and advisory capabilities through targeted, high-return acquisitions and partnerships. The $13 billion NFP acquisition broadened its middle-market presence, while the purchase of Griffiths & Armour expanded its U.K. footprint. Deals in Latin America and cybersecurity, including partnerships with Cover Whale and Binary Defense, enhance growth in high-demand areas. Collaboration with DataRobot supports AI-driven client onboarding and servicing efficiencies.

Also, Aon does not shy away from divesting non-core, lower-return businesses such as its Cybersecurity, IP Litigation Consulting Groups and NFP Wealth business to sharpen focus on high-return segments. This has contributed to a trailing 12-month return on capital (ROC) of 15.7%, well above the industry average of 9%.

It is anchoring its growth strategy around disciplined execution of its 3x3 plan and the broader Aon United model, which integrates risk capital and human capital capabilities. The company invests in technology, operational consolidation and evolving solutions to meet emerging client needs, positioning it for scalable operations and long-term sustainable growth. A central growth engine is Aon Business Services (ABS), which underpins margin expansion and innovation. ABS enables scalable analytics, AI deployment and standardized operations across geographies.

Its cash-generating abilities help the company take shareholder value-boosting measures. AON bought back shares worth $1 billion in both 2024 and 2025. It had around $1.3 billion of authorization left under its share repurchase program at the fourth quarter-end.

AON’s Impressive Earnings Surprise History

Aon boasts a robust earnings surprise record. It beat estimates in three of the trailing four quarters and missed once, the average surprise being 1%.

Key Concerns

However, there are some factors that investors should keep an eye on.

The company’s operating expenses have escalated over the last several years due to higher compensation and benefits expenses, and information technology expenses. Total expenses increased 8.9% in 2023, 23.7% in 2024 and 8.2% in 2025.

Aon exited the fourth quarter with cash and cash equivalents of $1.2 billion, which contrasts with a substantial long-term debt of $14.7 billion. Also, short-term debt and the current portion of long-term debt were at $589 million. Its long-term debt to capital of 60.9% is higher than the industry average of 44.8%. The debt-heavy balance sheet has led to an increase in interest expenses. The metric jumped 19.2% in 2023, 62.8% in 2024 and 3.4% in 2025.

How Are AON’s Industry Players Performing?

Several competitors in the insurance space, like American International Group, Inc. AIG and Lincoln National Corporation LNC, are also making moves.

AIG is benefiting from strategic divestitures, cost-curbing efforts, technological advancements and sound cash reserves. AIG’s robust cash generation abilities have enabled it to continue elevating shareholder value through share buybacks and dividend payouts. In 2025, the company rewarded its shareholders with share repurchases of $5.8 billion and dividends of $1 billion.

LNC is well-poised for growth, supported by its impressive performance in all segments. The company is also rolling out new products, improving existing ones and maintaining a strong financial base. As of Dec. 31, 2025, cash and invested cash were $9.5 billion, which rose from the 2024-end level of $5.8 billion, and its total debt stands at $6.3 billion.

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This article originally published on Zacks Investment Research (zacks.com).

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